Why Did the Judge Cancel the 1% VAT Penalty Despite the Taxpayer Not Issuing Invoices?

Tax Ruling: Boundaries of Sanctions for Non-VAT Registered Taxpayers (CV BAM Case)

Tax Court Decision Number PUT-001257.99/2025/PP/M.VB reinforces crucial boundaries regarding the legal subjects liable for sanctions under Article 14 paragraph (4) of the KUP Law. This case serves as a landmark for protecting taxpayers from contradictory regulatory enforcement.

The Conflict: Administrative Duty vs. Criminal Prohibition

The DGT issued a 1% penalty to CV BAM for failing to issue Tax Invoices in 2019. However, at the time, CV BAM was not yet registered as a PKP. While the DGT argued that certain goods deliveries mandate PKP registration, the taxpayer emphasized a critical paradox: under Article 39A of the KUP Law, non-PKPs are strictly prohibited from issuing Tax Invoices under threat of criminal sanctions.

Judicial Consideration: No Retroactive Obligations for Non-PKPs

The Board of Judges provided an enlightening opinion: sanctions under Article 14 paragraph (4) are historically and systematically intended only for entrepreneurs officially registered as PKP. Requiring a non-PKP to issue a Tax Invoice contradicts the criminal prohibitions within the KUP Law itself. Furthermore, as the audit resulted in a Nil Tax Assessment (SKPN), the court annulled the sanctions due to the incorrect application of legal norms.

Implications: Legal Protection Against Overlapping Regulations

This decision demonstrates the importance of legal certainty. It establishes a strong precedent that formal PKP obligations cannot be applied retroactively. Taxpayers are now better protected against interpretations that force them to choose between administrative non-compliance and criminal violations.

Conclusion

The imposition of tax sanctions must respect the actual legal status of the taxpayer at the time of the transaction. Tax compliance should be enforced reasonably and must not compel taxpayers to violate other prevailing criminal provisions.

A Comprehensive Analysis and the Tax Court Decision on This Dispute Are Available Here